At least value oriented investment clubs are making the jump into technology:
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USA TODAY
April 2, 1997, Wednesday, FIRST EDITION
Investment clubs keep turning to tech stocks
BYLINE: Sandra Block
Wall Street may have turned its back on technology stocks, but on Main Street those stocks are more popular than ever, according to a survey of the USA's 27,000 investment clubs.
The survey, conducted in December by the National Association of Investment Clubs (NAIC) in Madison Heights, Mich., found that Motorola was the stock held by the most investment clubs last year. McDonald's, No. 1 the past six years, fell to fourth place.
Software, networking and telecommunications companies are moving into spots previously held by household names such as McDonald's, Wal-Mart and Rubbermaid. And nearly all tech stocks moved up on NAIC's list.
Changes in investors and companies make tech more popular among the nation's 500,000 club members:
-- Club members are younger. The average age is 54, vs. 65 a decade ago, says NAIC President Kenneth Janke. And members are more comfortable with technology: 80% use personal computers, vs. 20% five years ago.
-- Tech companies are older. Clubs typically review long-term performance before buying stock, which rules out young tech stocks. As the industry matures, more companies meet clubs' criteria. Bill Looye of Lincoln, Neb., says his Smith Manufacturing club bought three tech stocks last year. "They're not dining-room table companies," but all performed well, he says.
-- Growth in high-tech jobs sparks interest. Colorado Springs has attracted technology companies, and their employees are starting investment clubs, says Bruce Hodgkins, an NAIC regional director. "Those clubs are holding more technology stocks because that's what business they're in," he says.
-- Volatility in tech stocks creates buying opportunities. Investment clubs typically look for undervalued stocks. Motorola, for example, dropped 21% the first 10 months of 1996 on disappointing earnings, recovering to finish up 8.3% for the year. The sell-off probably prompted many clubs to buy the stock, Janke says. "When you get a lot of institutions selling, club members may take that as a time to buy."
McDonald's was a worse performer in 1996, rising only 1.2%, vs. 23% for the Standard & Poor's 500 index. |
